Style Consistency, Fund Flow and Performance: A Study on U.S. Mutual Funds
30 Pages Posted: 28 May 2015
Date Written: May 27, 2014
This research investigates the relationship between mutual funds investment style consistency, the future funds performance, and funds net flow. Using a large sample of actively-managed U.S. equity mutual funds from Morningstar database, for the period from January 2002 to December 2011, 5555 mutual funds are classified into nine style categories. Our results support the findings from existing literatures that style consistency is of vital importance to fund performance. Taking a different approach we find that more style consistent funds tend to have better long term future performance. However, results suggest that style consistency is not related to future funds net flows, indicating that investors do not pay more attention to style consistency when making their future investment decisions.
Keywords: Mutual funds, Style consistency, Fund performance, Fund flow
JEL Classification: G11, G24
Suggested Citation: Suggested Citation